Wednesday, 29 June 2011

Ofgem demands reforms to gas and electricity markets

Britain's six largest utilities face tough retail power market reforms next year which could force them to auction off more than one fifth of electricity they produce, energy regulator Ofgem said on Wednesday.

The regulator proposed in March to impose power production auctions of up to twenty percent of generation on the Big Six utilities -- Scottish and Southern Energy (SSE.L
), Centrica (CNA.L), Iberdrola's (IBE.MC) Scottish Power, RWE npower (RWEG.DE), EDF Energy (EDF.PA) and E.ON UK (EONGn.DE).

But Ofgem's three-month consultation showed some respondents, especially smaller power suppliers such as First Utility, favour full production auctions to prevent large utilities from supplying and producing power at the same time.

"Some people think the figure should be higher so we're undertaking further analysis and will come up with an impact analysis later this year. It's important to us that the volume is efficient enough to have an impact on liquidity," a spokesman for Ofgem said.

The reforms are expected to come into force next year, but exact timing depends on whether the utilities will refer proposals to the Competition Commission.

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